All 50 questions from the General Certificate of Education (GCE) Accounting 2022 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The user of accounting information who is responsible for the overall performance of the business is the
Directors are responsible for the overall performance of the business.
Use table: Year 2018 - Current Assets N52,550, Liabilities N78,600, Fixed Assets N127,450, Capital X; Year 2019 - Current Assets N41,650, Liabilities N53,220, Fixed Assets Y, Capital N116,780. The letter X represents
Capital(X) = Fixed Assets + Current Assets - Liabilities = 127,450 + 52,550 - 78,600 = N101,400 (prepare a balance sheet to find X).
Using the table in Q2, the letter Y represents
Fixed Assets(Y) = Capital + Liabilities - Current Assets = 116,780 + 53,220 - 41,650 = N128,350 (prepare a balance sheet to find Y).
The document prepared by the buyer and sent to the seller listing the items to be supplied is the
A purchase order is a document prepared by the buyer and sent to the seller listing the items to be supplied.
Adiza gave an instruction to her banker to pay a premium of Le 30,000 from her account to Union Rock Insurance on a quarterly basis for a policy. This instruction is an example of
A standing order is an instruction issued to a bank to make a payment at a regular stated interval from an account.
Books of accounts are opened by the use of
The journal (general journal) is a book of original/prime entry where transactions are first recorded temporarily.
The principal book of account where accounts are classified and summarized is
The ledger is the principal book of accounts, serving as the final destination of all financial transactions from the subsidiary books.
The entries for cash drawn from the bank by a proprietor for private use is: debit
Cash drawn for private use decreases the bank account (credit) and increases drawings (debit) - Debit Drawings, Credit Bank.
Cash book balance (credit) $750; Uncredited cheques $500; Unpresented cheques $1,680; Direct credit $300; Bank charges $150. The adjusted cash book balance is
Adjusted cash book: 750 (Cr) - 300 (direct credit) + 150 (bank charges) = $600 Cr.
Using the information in Q9, the balance as per bank statement is
Balance per bank statement = adjusted cash book (600 Cr) + unpresented cheques (1,680) - uncredited cheques (500) = 580 overdrawn (Dr).
The accounting concept which states that expenditure involving insignificant amounts should be regarded as expenses and not assets is
The materiality concept ensures only transactions significant to user decision-making are separately recorded as assets; insignificant amounts are treated as expenses.
Resources owned and controlled by a business is
Assets are resources owned and used by a business to generate future revenues.
Items shown in the balance sheet as an asset includes
A debit balance on a customer's account signifies a debtor, which is posted as a current asset on the balance sheet.
A trader bought goods worth N16,000 and sold three-quarters of it for N20,000. The gross profit is
Cost of goods sold = 3/4 x 16,000 = N12,000. Gross profit = Sales - COGS = 20,000 - 12,000 = N8,000.
Using the information in Q14, the margin would be
Margin = Profit/Selling price = 8,000/20,000 = 2/5.
An increase in provision for doubtful debts would result in
Provision for doubtful debts is charged to the profit and loss account as an expense, so an increase reduces net profit (gross profit is unaffected).
Kako Ltd bought a machine for D1,200,000 on 1 January 2018. Depreciation was provided annually at 10% using the diminishing (reducing) balance method. The machine was sold for D880,000 on 31 December 2021. The accumulated depreciation as at the date of disposal was
Depreciation: 2018=120,000; 2019=108,000; 2020=97,200; 2021=87,480. Accumulated = 120,000+108,000+97,200+87,480 = D412,680.
Using the information in Q17, the net book value of the machine in the balance sheet as at 31 December 2020 was
Net book value after 2020 depreciation (10% x 874,800) = 874,800 - 87,480 = D787,320.
Using the information in Q17, the profit or loss on disposal of the machine was
Profit on disposal = Price sold - Net book value = 880,000 - 787,320 = D92,680 profit.
Manufacturing account is prepared to ascertain
A manufacturing account is used to ascertain the cost of goods manufactured/produced by a company.
Raw materials: Stock (01/10/2017) Le822,000; Stock (31/12/2017) Le560,000; Purchases Le125,000; Returns of raw materials Le15,000. The cost of raw materials available for production is
Cost of materials available for production = Opening stock + Purchases - Returns = 822,000 + 125,000 - 15,000 = Le932,000.
Using the information in Q21, the cost of raw materials consumed is
Cost of raw materials consumed = Materials available for production - Closing stock = 932,000 - 560,000 = Le372,000.
One of the items on the debit side of a sales ledger control account is
Any transaction that increases the debt (e.g. a dishonoured cheque/bill) is recorded on the debit side of the sales ledger control account; bills dishonoured by debtors increases what they owe.
The sales ledger contains accounts of
The sales ledger (also called the debtors control account) contains the accounts of trade debtors.
Sales GH¢200,000; Purchases GH¢170,000; Opening stock GH¢40,000; Closing stock GH¢50,000. The gross profit percentage is
Cost of Sales = 40,000+170,000-50,000=160,000. Gross Profit = 200,000-160,000=40,000. GP% = 40,000/200,000 x100 = 20%.
Using the information in Q25, the stock turnover ratio is
Stock turnover ratio = Cost of goods sold / Average stock = 160,000 / ((40,000+50,000)/2) = 160,000/45,000 = 3.56 times.
Provision for doubtful debts is made in conformity with
The prudence concept requires an accountant to exercise caution and make provision for anticipated losses such as doubtful debts.
Subscription in advance is treated in the balance sheet under
Subscription received in advance is a liability to the organization, since the service period it relates to has not yet arrived.
In the balance sheet of not-for-profit-making organizations, subscriptions in arrears is shown under
Subscription in arrears is an asset (amount owed to the organization) since the period for its collection is over.
A set of rules and procedures guiding the operations of a partnership is called
A partnership deed (or agreement) is the laid-down rules by partners guiding the operation of the partnership business.
Drawings made by a partner would be
Drawings and interest on drawings are recorded on the debit side of a partner's current account.
Teteh and Kukuma are in partnership with capital balances of #300,000 and #200,000 respectively. They agreed to share profit on the basis of their capital, and interest on capital is 5%. The profit for the year is #150,000. Teteh's share of profit is
Ratio of capital 300,000:200,000 = 3:2. Teteh's share = 3/5 x 150,000 = #90,000.
Using the information in Q32, Kukuma's current account balance is
Kukuma's current account = interest on capital (5% x 200,000 = 10,000) + share of profit (2/5 x 150,000 = 60,000) = #70,000.
Using the information in Q32, Teteh's share of interest on capital is
Interest on capital = 5% x 300,000 = #15,000.
An item that would be classified as preliminary expenses in a company's account is
Preliminary expenses are those relating to the initial, introductory and preparatory setting up of a company (formation expenses).
An item that would be considered a first charge against profit in a company's account is
Preference shareholders' dividends are paid before any other shareholders, making them a first charge against profit.
The maximum amount a company can raise through the issue of shares is
Authorized capital is the capital stated at the onset of the company in its memorandum of association; the company cannot raise share capital beyond this without amending it.
A unit of a company's capital is
A share is a unit of a company's capital, while stock is the capital raised through issue of shares expressed in aggregate.
Bola, a grocer, keeps petty cash on the imprest system, the float being GH¢8,000. Given the January 2018 petty cash transactions, the amount posted to the personal ledger was
Payments to a named creditor (Biodun, a personal/ledger account) total GH¢1,072/1,074 based on the petty cash book workings, and are posted to the personal ledger.
Using the information in Q39, the amount spent on stationery was
Total spent on stationery items (note books, envelopes, stamps etc. as classified in the analysis columns) sums to GH¢1,530 per the petty cash book workings.
Using the information in Q39, the amount reimbursed at the end of the month was
The amount reimbursed restores the float to GH¢8,000, equal to total petty cash payments for the month of GH¢7,456.
One of the items on the credit column of a trial balance is
Returns outwards (purchases returns) reduce purchases and carry a credit balance in the trial balance.
Revenue expenditure of a local government includes purchase of
Revenue expenditure covers the day-to-day running costs of government departments, such as drugs for hospitals; the other items are capital expenditure.
The authority to incur expenditure to address a natural disaster is contained in a(n)
A contingency warrant authorizes access to the contingency fund, which is set aside for unforeseen events such as natural disasters.
Trading Account of Umeh Enterprises for the year ended 31 December 2019: Opening stock GH¢10,000; Purchases GH¢120,000; Returns inward GH¢40,000; Closing stock GH¢22,800; Sales GH¢200,000. The cost of goods sold is
Cost of goods sold = Opening stock + Purchases - Closing stock = 10,000 + 120,000 - 22,800 = GH¢107,200.
Using the information in Q45, the gross profit is
Gross profit = Net sales - Cost of goods sold = (200,000 - 40,000) - 107,200 = GH¢88,800.
The GH¢4,000 on the credit side of the trading account (Q45 data) is
Returns inwards (sales returns) are deducted from sales/appear on the credit side workings of the trading account.
Balance sheet data: Motor vehicle D500,000; Stock D35,000; Debtors D18,000; Cash D12,850; Bank Overdraft D280,000; Creditors D21,500. The capital is
Capital = Total assets - Total liabilities = (500,000+35,000+18,000+12,850) - (280,000+21,500) = 565,850 - 301,500 = D264,350.
Using the information in Q48, the total current asset is
Total current assets = Stock + Debtors + Cash = 35,000 + 18,000 + 12,850 = D65,850.
Using the information in Q48, the total current liability is
Total current liabilities = Bank overdraft + Creditors = 280,000 + 21,500 = D301,500.
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